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Preparing To Trade AUD Forex Markets

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All serious forex traders need to investigate trading the Australian dollar (ISO code “AUD”). It’s now an International Monetary Fund reserve currency and trading in it represents the 5th largest liquidity pool in the forex world. The AUD also has a relatively higher interest rate attached to it. Thus, in many cases, you will be paid extra – every 24 hours – for being long an AUD-related currency pair (e. g., AUD/JPY). Researching more about the AUD is relatively easy. All major Australian newspapers are online and are not gated. The central bank is very forthcoming with its reports and policies; and, speeches by Governor Glenn Stevens are widely reported. Keep your eyes on the global economic calendar that your forex bank or broker provides you and you shouldn’t have any problems knowing when the next AUD-related forex trading announcement or event is going to happen.

If you are a forex beginner, stick with the AUD/USD (the most widely forex traded AUD-related currency pair). The AUD/JPY (Asia’s favourite AUD-related currency pair) is also fun.

Setting Up As An AUD Forex Trader

If you have never traded the AUD before, there are certain things that you have to do before you ever launch a single forex trade. First off, start reading the “Sydney Morning Herald” (Australia’s most widely read newspaper). It’s online for free and the “Business” section is highly recommended. Secondly, bone up on China (because the Chinese economy sucks up a huge amount of Australian exports and the moment there is any sign that this vacuum cleaner is having any suction problems, the price of the AUD usually reflects this). If you are pressed for time, just knowing what the “Shanghai Comp.” has been doing to will suffice. The “Market Data” section of Bloomberg.com provides open, high, low and closing data.

Making Research Work When Trading AUD In Forex

AUD-related research falls into three main categories. Firstly, because the AUD/USD is the most widely traded AUD-related currency pair, you need to know everything about the monetary policies of the “Reserve Bank of Australia” (the “RBA”, Australia’s central bank) as well as those of the US Federal Reserve (the American central bank). Then, you need to understand the economic relationship between China’s industrial centres and Australian’s mining sector. A hiccup in one usually translates into a burp in the other. If you’re going to forex trade the AUD/JPY, then you must follow what is happening in the world of Japanese economics, as the main thrust of Japanese Prime Minister Abe’s policies continue to weaken the purchasing power of the Japanese yen.

Developing The Right Attitude To Trade AUD In Forex Markets

Forex trading the AUD is a little bit like living in the land of “Oz” without having to put up with a myriad of highly unusual creatures that can invade your swimming pool at any time. It’s a commodity play without the commodities. It’s an antipodean opportunity without having to remember that winter equals summer (or vice versa). It’s Bondi beach without getting wet! For pure fun, for example, almost nothing beats trading the AUD/JPY. First, it’s a “positive interest rate carry” (meaning that you get paid a little extra just for being long every 24 hours). Next, it’s a great range trade (just slap a Donchian Channel indicator on a chart, buying at the “floor” and selling at the “ceiling”).

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